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Genesee County Agricultural and Farmland Protection Plan

Genesee County Agricultural and Farmland Protection Plan


APPENDIX D: INDUSTRY PRACTICES References Economic Research Service, USDA. Understanding the Dynamics of Produce Markets. August 2000. Nayga, Rodlofo M. "Determinants of U.S. Household Expenditures on Fruit and Vegetables: A Note and Update." Journal of Agricultural and Applied Economics, 27(December 1995): 588-594. Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 14

APPENDIX D: INDUSTRY PRACTICES PRODUCE TRENDS What does the future hold for the produce industry and what will the market segments look like? The Packer conducted a comprehensive survey of the produce industry to try and determine where the industry was headed. The following are some excerpts from this study “Fresh Forward,” The Packer, Vance Publishing Corporation, 1999, that provide some insight as to what the future will hold. • Megaretailers, price pressure, contracts, free trade, technology, consolidation, food safety and government regulation have set the stage for a complex and competitive produce marketplace in the new millennium. • “With advances in information, packing and handling technology and the need to gain control over quality from a food safety and eating quality perspective, chains are going to want to do everything they can to gain control over all elements of quality, and that’s going to lead to more of them working with only key suppliers.” Says Roberta Cook, marketing economist with University California Davis. • Consumers will challenge the industry to monitor all of its practices more closely. Of all the issues bearing down on the industry, food safety probably will be the one to attract the most attention of regulators, legislators, consumers and consumer interests groups. The risks of microbiological contamination in food will lead to more attempts to regulate how produce is handled. • Retailer consolidation will be one of the biggest forces driving change in the new century. “Soon 5 companies, Megaretailers will account for half of all grocery sales,” says Thomas Zaucha, President of the National Grocers Association, Reston, VA. • Consumers spend 44 percent of their total food dollar away from home, and the National Restaurant Association predicts that share will rise to 53% by 2010. • Produce sales will grow to 15% of total supermarket sales, up from about 11 percent today. The majority of produce departments in 2005 will stock 600 produce SKUs, up from the current average of about 507. Annual retail produce sales, now at $35 billion, will continue to rise and top $50 billion. Produce sales will account for 25% of supermarket profits, up from 17% today. The fastest-growing segment of the produce department today is the premium quality area. Organic fresh produce sales will surpass 5% of department sales, up from 2 %. Display space dedicated to produce will expand from 13 percent of a supermarket square footage to about 18%. • Value-added fresh produce will account for 25% of produce department sales, up from 10-15 % today. More cut fruits and vegetables will account for much of that growth. Copyright©, 2000: Agricultural & Community Development Services, Inc, Columbia MD 15

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